Retail POS Machines Overview: Understanding Their Functions & How to Choose One

If you’re in the retail industry, there are a few pertinent pieces of technology you must have.

One of the most popular and vital devices the modern retailer needs is a POS system. Most of us have seen these machines hundreds of times, and probably use them on a weekly basis.

What is a retail POS system? POS stands for point of sale – and the name is largely self-explanatory. Yet, many people are unaware of just how much these systems do, and how they impact retail locations.

A POS machine is the device that handles transaction processing. It accepts and verifies payments – but those used in the retail environment are often more complex. They can track sales, print receipts, and even transform raw sales information into valuable metrics.

In its simplest form, a retail POS system could be thought of as the card scanner you see sitting by the cash register. However, this POS system guide will delve deep into the specifics behind these machines.

We’ll talk about what they are, how they’ve evolved, and why they’re important. We’ll also provide tips on how to pick the right one, including average costs and features to look for.

Your Guide to Retail POS Systems:

History and Origins of the POS System

Why Your Retailer Needs One

Different Types (and Who Should Use Each)

Price and Feature Guide for Choosing Your Own

Origins of the POS Machine: The Beginning of Sales Hardware Devices

Even a century ago, establishments were using machines to help them facilitate transactions, track payments, and manage inventory as they made sales.

Obviously, in the late 1800s and early 1900s, no one was swiping a credit card. However, the ancestor of the POS machine came about because a Dayton, Ohio saloon owner found some of his employees were stealing money from the business.

James Ritty was enlisted in the military when he discovered a technology that could count propeller revolutions on a ship. Using the same idea, he invented a machine to track sales.

The cash register didn’t remain in its primitive conception for long. New features soon followed, such as a cash drawer and the ability to program keys rather than requiring the operator to key in everything manually.

These upgrades, coupled with the growing popularity of alternative payment methods like credit and debit cards, led to the evolution of these systems.

What Makes a POS Machine Different from a Cash Register?

The modern POS system tracks much more than your typical cash register. Even electronic registers with programmable keys are limited in their functions – they usually only track when items are sold and how much cash is in the drawer.

Compare this to a modern POS retail system, which could track:

Special discounts (percentages and flat rates)

Inventory levels

Sales tax

Gift card usage (and remaining balance)

Sales percentage per time of day (to determine rush hour)

Most profitable product categories

Percentage of sales compared to sales forecasts

Those are just some of the important metrics these systems can track.

As we can see, the POS machine’s functionality is beyond a card swiper because it’s tracking a lot more than payment processes.

Why POS Machines Are Essential to Retailers

If you work in retail, you’re used to crunching numbers – row after row, page after page. Sometimes it can be overwhelming, especially without a robust system to help you manage it.

Not only do you need to keep track of your sales numbers, you also need to be mindful of how sales affect your inventory levels. Then there’s the matter of factoring in discounts, sales tax, gift cards, store credit, and other modifiers.

Cap it off with the need to record sales numbers across different time periods and product categories for reporting purposes, and it is easy to see why the retail POS system is an absolute must for any store.

Think of what you’re losing without one – the biggest factor being time. The more calculations you and your employees have to make manually, the more time you can’t put toward other areas of the business.

When it comes to analytics, over 70% of data goes unused at businesses – that’s a lot of information that could be studied. Then factor in how many companies feel their use of data is behind that of their competitors.

A POS system doesn’t just keep you on track – it analyzes metrics and turns them into useful data you don’t want to miss out on.

Popular Types of Retail POS System Options

Since the POS system is so popular, it should come as no surprise there are multiple options on the market. Which is right for you and your retail business?

Here are some of the main categories:

Mobile: Smartphones can be used to provide POS services such as payment processing, sometimes with the help of card-scanner addons. This option is great if you have a small amount of inventory to manage, do a lot of field work, or work as a freelancer/sole proprietor.

Tablet: This POS system option brings you all the conveniences of mobile, albeit with slightly less portability. The advantage of going with this one over mobile is that it’s sometimes better for tracking more important metrics. You can prop it up and analyze your data just as you would on a laptop, making it great for small teams and startups.

Terminal: These are the most common options for retailers, and you’re used to seeing them (at least in part) by the cash register of your favorite establishments. Terminal systems are usually a little more complex, and as a result can offer features like cloud backup, 24/7/365 support, label printing, and more. Terminals are popular for small businesses and enterprises alike.

These are some of the main categories the modern POS system could fall into. If you’re a retailer, which system should you buy? How much should you pay for it?

POS System Guide for Buyers: Picking the Right Fit for Your Store

If you’re a retailer with any type of physical location, the terminal system may be your best bet. This isn’t to say that the other options won’t serve you well – but a POS terminal will usually give you all the features you need to succeed.

Take these steps to pick the best POS option for your business:

Research Solutions and Read Reviews: Check out the leading names in the POS industry, and read what their customers have to say about them. This will help you narrow down your options – choosing between dozens is much easier than hundreds.

Ask Other Retailers or Product Providers: If you’re still unsure on which system to pick, ask associates at other retailers which system they use. If your network doesn’t have any other retail managers, you could always contact the companies who make the POS systems and ask them.

Watch a POS System in Action: What’s better than hearing about a system? Seeing it in action. Many companies (or review sites) show video demos of POS systems in use. Seeing how it works can help you decide whether it’s the right fit for you.

Use Trials and Demos: The best way to choose between two products is to try them out. See if the company you’re considering offers free trial periods. Even in a limited version, trials can provide you with the input you need to make the right decision.

Further Reading

If you need more info on how to effectively compare different point of sale solutions, download Vend’s POS Buyer’s Guide. In this resource, you will learn the 7 secrets to find a reliable POS system, and avoid the costly mistakes most retailers make when choosing a new retail platform.

A 2018 study by Business News Daily called Vend the best POS system provider based on cost, features, and overall product performance.

The Lite plan (built for single location stores) costs only $99 per month if you opt for the annual billing option. You can opt for a pro plan with multi-store functionality for $129 per month if billed annually, or go for enterprise options, which are subject to custom pricing and available with quotes.

You’ll want a system like this because it can integrate with payment processors like PayPal and Square. You should also consider a system like this for the features it offers – ones to look for include recording and analytics, ecommerce integrations, quick keys, and user account permissions.

It’s more than just a tool for making sales – a retail POS system is a complete solution for complex business operations.

Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.